<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- - --------------------------------------------------------------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________________
Commission File Number: 0-29292
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HAGLER BAILLY, INC.
(Exact name of registrant as specified in its charter)
- - --------------------------------------------------------------------------------
Delaware
(State or other jurisdiction of incorporation or organization)
54-1759180
I.R.S. Employer Identification Number
1530 Wilson Boulevard, Suite 400, Arlington, VA 22209 (Address of
principal executive offices) (Zip Code)
703-351-0300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. [X]Yes [ ]No
As of July 31, 1998, the Registrant had 9,647,616 shares of its common stock
outstanding.
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TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS..................................................1
CONSOLIDATED BALANCE SHEETS.................................................1
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)...........................2
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)...........................3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..................................4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.............................................5
PART II
ITEM 1. LEGAL PROCEEDINGS.....................................................9
ITEM 2. CHANGES IN SECURITIES.................................................9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS...................10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................10
SIGNATURES....................................................................14
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<TABLE>
<CAPTION>
PART I
Item 1. Financial Statements
Hagler Bailly, Inc.
Consolidated Balance Sheets
June 30, December 31,
---------------------------------
1998 1997
---------------------------------
<S> <C> <C>
(unaudited) (restated)
Assets
Current assets:
Cash & cash equivalents $5,506,845 $3,967,527
Investments 7,327,614 6,775,331
Accounts receivable, net 39,683,625 33,334,926
Note receivable 1,000,000 1,000,000
Prepaid expenses 3,765,808 731,067
Other current assets 696,240 1,867,444
--------------- ----------------
Total current assets 57,980,132 47,676,295
Property and equipment, net 3,466,431 2,916,873
Software development costs, net 2,474,319 2,463,174
Intangible assets, net 9,245,391 6,925,960
Other assets 1,143,151 1,289,349
Deferred income taxes 24,355 601,002
--------------- ----------------
Total assets $74,333,779 $61,872,653
============ ===========
Liabilities and stockholders' equity
Current liabilities:
Bank line of credit $239,790 $ -
Accounts payable and accrued expenses 6,175,979 5,543,664
Accrued compensation and benefits 4,158,829 5,096,818
Billings in excess of cost 1,061,812 1,757,208
Notes payable-financial institution - 180,000
Notes payable-related party 14,877 620,417
Current portion of long-term debt 208,488 -
Income taxes payable 83,868 1,951,897
--------------- ----------------
Total current liabilities 12,830,853 16,533,693
Long-term debt, net of current portion - 21,014
--------------- ----------------
Total liabilities $12,830,853 $16,554,707
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized,
none issued and outstanding - -
Common stock, $0.01 par value, 20,000,000 shares authorized; 9,606,579
and 9,051,345 issued and outstanding in 1998 and 1997 96,066 90,513
Additional capital 54,889,128 41,436,216
Retained earnings 6,713,696 3,791,217
Foreign currency translation (195,964) -
--------------- -----------------
Total stockholders' equity 61,502,926 45,317,946
--------------- -----------------
Total liabilities and stockholders' equity $74,333,779 $61,872,653
============ ===========
See accompanying notes.
</TABLE>
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<TABLE>
<CAPTION>
Hagler Bailly, Inc.
Consolidated Statements of Operations
(Unaudited)
Three months ended Six months ended
June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
--------------------------------- ---------------------------------
Revenues:
Consulting revenues $27,716,194 $24,356,488 $50,043,272 $45,459,241
Other revenues 1,139,095 785,521
--------------- ------------ ------------ ----------
542,710 2,454,237
Total revenues 28,855,289 24,899,198 52,497,509 46,244,762
Cost of services 21,402,167 18,613,188 40,156,548 35,015,935
--------------- -------------- -------------- ------------
Gross profit 7,453,122 6,286,010 12,340,961 11,228,827
Merger related costs 995,672 - 1,362,930 -
Selling, general and administrative expenses 3,822,835 2,976,792 5,758,265 5,490,660
Stock and stock option compensation - - - 64,869
-------------- -------------- -------------- ------------
Income from operations 2,634,615 5,673,298
3,309,218 5,219,766
Other income (expense) 83,059 (152,486) 117,348 (446,804)
-------------- -------------- -------------- ------------
------- --------- -------
Income before income tax expense 2,717,674 5,226,494
3,156,732 5,337,114
Income tax expense 1,059,893 2,310,560
--------------- ----- ----- --------------
1,506,524 2,081,319
Net income before extraordinary gain 1,657,781 2,915,934
1,650,208 3,255,795
Extraordinary gain, net of income tax expense
of $55,906 tax for the three months ended
June 30, 1997 737,709 737,709
------------------ ------- -------------------------------
- -
-- -
Net income $1,657,781 $2,387,917 $3,255,795 $3,653,643
= =========== = =========== = =========== = ==========
Net income per share:
Basic:
Net income before extraordinary gain $0.18 $0.25 $0.36 $0.46
Extraordinary gain, net of income tax expense $ - $0.11 $ - $0.12
Net income $0.18 $0.36 $0.36 $0.58
Diluted:
Net income before extraordinary gain $0.17 $0.23 $0.33 $0.41
Extraordinary gain, net of income tax expense $ - $0.10 $ - $0.10
Net income $0.17 $0.33 $0.33 $0.51
Weighted average shares outstanding:
Basic 9,188,013 6,342,627
=============== ===== ===== ==============
6,550,873 9,028,838
Diluted 10,029,667 7,138,113
=== =========== ===== ===== ==============
7,236,602 9,844,817
Comprehensive income:
Net Income $ 1,657,781 $ 2,387,917 $ 3,255,795 $ 3,653,643
Foreign currency translation adjustment, net
Of $20,849 and $76,426 tax, for the three
Months and six months ended June 30, 1998 (119,538)
-------- ------------------ ---------
(32,610) - -
-------- -- -
Comprehensive income $1,625,171 $2,387,917 $3,136,257 $3,653,643
= =========== = =========== = =========== = ==========
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Hagler Bailly, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Six months ended June 30,
<S> <C> <C>
------------------------------------------
1998 1997
------------------------------------------
Operating activities
Net income $3,255,795 $3,653,643
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 1,682,032 1,150,070
Extraordinary gain (737,709)
-
Provision for deferred income taxes 1,625,341
80,168
Provision for possible losses 164,177
82,418
Amortization of deferred stock compensation 64,869
-
Changes in operating assets and liabilities:
Accounts receivable (6,431,114) (4,460,520)
Prepaid expenses (3,034,741) (70,967)
Other current assets 1,171,204 (2,189,313)
Other assets (798,142)
146,198
Accounts payable and accrued expenses 632,315 1,087,593
Accrued compensation and benefits 1,587,497
(937,989)
Billings in excess of cost (971,364)
(695,396)
Income taxes payable (1,868,029) 207,178
------------------ ------- -------
Net cash provided by (used in) operating activities (5,917,139) 312,353
Investing activities
Acquisition of property and equipment (1,362,469) (637,491)
Purchase of investments (78,022)
(552,283)
Purchase of 100% interest in Estudio "Q" and PT Indonesia (1,099,765)
-
Investment in software development
(500,000) -
--------- -
Net cash used in investing activities (3,514,517) (715,513)
Financing activities
Issuance of common stock, net of offering costs 11,858,529 116,969
Repurchase of common stock (45,857)
Dividends paid by Izsak Grapin (233,333)
(333,315)
Net borrowings from bank line of credit 3,625,000
239,790
Principal payments on debt (849,031)
(598,066)
Net cash provided by financing activities 11,166,938 2,613,748
Net increase in cash and cash equivalents 1,735,282 2,210,588
Foreign currency gain (loss)
(195,964) -
Cash and cash equivalents, beginning of period 3,967,527 2,043,567
------------------ ---- ---------
Cash and cash equivalents, end of period $5,506,845 $4,254,155
=================== =================
See accompanying notes.
</TABLE>
<PAGE>
HAGLER BAILLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying unaudited interim consolidated financial statements of
Hagler Bailly, Inc. (the "Company") have been prepared pursuant to the rules of
the Securities and Exchange Commission ("SEC") for quarterly reports on Form
10-Q and do not include all of the information and note disclosures required by
generally accepted accounting principles. The information furnished herein
reflects all adjustments, of a normal recurring nature, which are, in the
opinion of management, necessary for a fair presentation of results for these
interim periods.
The interim results of operations are not necessarily indicative of the
results to be expected for the entire fiscal year ending December 31, 1998.
As a result of a business combination completed in the second quarter
which was accounted for as a pooling of interest as described in Note 3 below,
all consolidated financial statements presented for the three-month and
six-month periods ended June 30, 1998 and 1997 and as of December 31, 1997 have
been restated to include the results of operations and financial position of
Izsak, Grapin et Associes, S.A.R.L. ("Izsak Grapin"). These financial statements
should be read in conjunction with the Company's audited consolidated financial
statements and notes thereto for the year ended December 31, 1997, included in
the Form 10-K and restated in the Form 8-K filed on June 12, 1998.
Note 2. Earnings per Share
Basic earnings per share is computed based on the weighted average
number of shares of common stock outstanding during the respective periods.
Diluted earnings per share is inclusive of the dilutive effect of unexercised
stock options using the treasury stock method.
Note 3. Pooling of Interests
On June 30, 1998, the Company acquired all of the stock of Izsak Grapin
in exchange for 183,550 shares of the Company's common stock. The transaction
was accounted for as a pooling of interests. Accordingly, the Company's
financial statements have been restated to include the results of Izsak Grapin
for all periods presented.
Note 4. Cash Dividend
Retained earnings for 1998 were reduced by a cash dividend of $333,316
paid by Izsak Grapin, the pooling of interest transaction detailed in Note 3
above, prior to its acquisition by the Company. The dividends per share for the
Izsak Grapin stock were $1.82.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical in
nature, are intended to be, and are hereby identified as, "forward looking
statements" for purposes of the safe harbor provided by Section 21E of the
Securities Exchange Act of 1934, as amended by Public Law 104-67.
Forward-looking statements may be identified by words including "anticipate,"
"believe," "estimate," "expect" and similar expressions. The Company cautions
readers that forward-looking statements, including without limitation, those
relating to the Company's future business prospects, revenues, working capital,
liquidity, and income, are subject to certain risks and uncertainties that would
cause actual results to differ materially from those indicated in the
forward-looking statements, due to several important factors such as
concentration of the Company's revenues from a relatively limited number of
public and private clients involved in the energy and network industries, the
Company's ability to attract, retain and manage professional and administrative
staff, fluctuations in quarterly results, risks related to acquisitions, and the
fact that historical operations and performance are not necessarily indicative
of future operations and performance, among others, and other risks and factors
identified from time to time in the Company's reports filed with the SEC,
including the risk factors identified in the Company's Registration Statement
(No. 333-22207) on Form S-1, the Company's Annual Report on Form 10-K for the
year ended December 31, 1997, and the Company's Proxy Statement for its Special
Meeting of Stockholders dated July 27, 1998.
The Company, together with its wholly owned subsidiaries Hagler Bailly
Services, Inc., Hagler Bailly Consulting, Inc., HB Capital, Inc., Apogee
Research, Inc., TB&A Group, Inc., and several of its foreign wholly owned
subsidiaries, provides professional services to corporations and governments
worldwide. The Company's focus is on energy, network industries and the
environment.
Recent Events
On June 11, 1998 the Company signed a definitive agreement to combine
with Putnam, Hayes & Bartlett, Inc. ("PHB"). The Company anticipates issuing up
to 6.6 million shares of its common stock to the shareholders of PHB in
connection with the transaction. PHB had gross revenues of approximately $63
million in 1997. For a copy of the definitive agreement, see the Company's Proxy
Statement for its Special Meeting of Stockholders dated July 27, 1998.
On June 16, 1998 the Company and Cap Gemini S.A. and its wholly owned
subsidiary Cap Gemini America, Inc. entered into an exclusive joint venture to
deliver information technology consulting services and solutions to electric,
gas and water utilities and service providers in the U.S. and Canada.
On June 30, 1998 the Company acquired all of the stock of Izsak Grapin in
exchange for 183,550 shares of its common stock. The transaction was accounted
for as a pooling of interests.
Results of Operations
Revenues. Revenues increased 15.9% to $28.9 million for the quarter ended
June 30, 1998 from $24.9 million in the quarter ended June 30, 1997. Revenues
increased 13.5% to $52.5 million for the six months ended June 30, 1998 compared
to $46.2 million in the six months ended June 30, 1997. Consulting revenues
increased 13.8% to $27.7 million for the quarter ended June 30, 1998 compared to
$24.4 million in the comparable period in 1997. Consulting revenues increased
10.1% to $50.0 million for the six months ended June 30, 1998 compared to $45.5
million for the six months ended June 30, 1997. These increases are the result
of the Company's focus on the growth of international private sector engagements
by increasing capacity through the purchase of Estudio Q, S.R.L. ("Estudio Q"),
an Argentinean company, and the acquisition of Izsak Grapin, a French company,
increased volume in selected public sector work, and the development of "other
revenues". Other revenues, the Company's revenues associated with
information-based products and services and financial advisory services,
increased 109.9% to $1.1 million for the quarter ended June 30, 1997 compared to
$0.5 million in the comparable period in 1997.
Cost of Services. Cost of services increased 15.0% to $21.4 million for the
quarter ended June 30, 1998 from $18.6 million for the quarter ended June 30,
1997. Cost of services increased 14.7% to $40.2 million in the six months ended
June 30, 1998 compared to $35.0 million for the six months ended June 30, 1997.
Cost of services increased due to the increase in revenue.
Gross Profit. Gross profit increased 18.6% to $7.5 million for the quarter
ended June 30, 1998 from $6.3 million for the quarter ended June 30, 1997. Gross
profit increased 9.9% to $12.3 million in the six months ended June 30, 1998
compared to $11.2 million for the comparable period. Gross profit as a
percentage of revenues was 25.8% and 23.5% for the second quarter and the six
months ended June 30, 1998 as compared to 25.2% and 24.3% for the second quarter
and the six months ended June 30, 1997. The increase in gross margin for the
quarter is the result of the additional high margin business from the private
sector and the increased profitability in "other revenues", the
information-based products and services and financial advisory services.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") increased to $4.8 million and $7.1 million
($3.8 million and $5.8 million, exclusive of merger related costs) for the
quarter and six months ended June 30, 1998. As a percentage of revenue, SG&A
increased to 16.7% (13.2% without merger related costs) for the quarter ended
June 30 from 12% for the comparable 1997 quarter. The increase can be
attributable to costs associated with continued integration of business
combinations and to the merger activity related to PHB of $1.0 million. In
addition, the Company significantly increased marketing efforts in the second
quarter.
Income From Operations. Income from operations was $2.6 million for the
quarter ended June 30, 1998 compared to $3.3 million for the quarter ended June
30, 1997. Income from operations decreased to $5.2 million in the six months
ended June 30, 1998 compared to $5.7 million for the six months ended June 30,
1997. These decreases can be attributed to the merger-related activities
described above.
Other Income (Expense). Other income (expense) was $0.08 million of income
for the quarter ended June 30, 1998 and $(0.2) million of expense for the
quarter ended June 30, 1997, $0.1 million of income and $(0.4) million of
expense for the six months ended June 30, 1998 and June 30, 1997, respectively.
The net change is due to the interest income earned from the investment of cash
received from the issuance of common stock in 1998 and the reduction of the
Company's debt in 1997.
Income Tax Expense. Income tax expense was $1.1 million for the quarter
ended June 30, 1998 compared to $1.5 million for the quarter ended June 30,
1997. Income tax expense was $2.1 million for the six months ended June 30, 1998
compared to $2.3 million for the six months ended June 30, 1997. For the
quarters ended June 30, 1998 and 1997 income tax expense as a percentage of
income before income tax expense was 39.0% and 47.7%, respectively, and for the
six month periods ended June 30, 1998 and 1997 income tax expense as a
percentage of income before income tax expense was 39.0% and 44.2%,
respectively. The company accrues income tax at 39% of income before tax
expense. The additional amounts expensed in 1997 for the quarter and six months
ended June 30 are related to taxes associated with the extraordinary gains from
the extinguishment of debt at more favorable terms to the Company.
Net Income. As a result of the preceding information, net income for the
quarter ended June 30, 1998 was $1.7 million compared to $2.4 million for the
quarter ended June 30, 1997. Net income as a percentage of revenue (excluding
merger related costs of $1.0 million) was 7.9% for the quarter ended June 30,
1998 as compared to 6.6%, excluding the extraordinary gain, for the comparable
1997 period. Net income for the six months ended June 30, 1998 and 1997 was $3.2
million and $3.7 million, respectively. The decrease from 1997 to 1998 is due to
the extraordinary gain recognized in 1997. Liquidity and Capital Resources
At June 30, 1998 and December 31, 1997, the Company had working capital of
$45.1 million and $31.1 million, respectively. The $14.0 million increase in
1998 is primarily due to the private placement of 470,975 shares of the
Company's common stock, for consideration of $12.5 million, to Cap Gemini
America, Inc. These shares were issued concurrently with the formation of a
joint venture with Cap Gemini America, Inc., Cap Gemini Hagler Bailly L.L.C. The
increase can also be attributed to the growth in accounts receivable.
Net cash used in operations consisted primarily of net income plus elements
of cash flows related to accounts receivable and related billings, accounts
payable and accrued compensation adjusted for non-cash items including
depreciation and provision for possible losses. The use of funds in operations
of $5.9 million for the six months ended June 30, 1998 can primarily be
attributed to the growth in accounts receivable, the payment of bonuses, and the
payment of estimated taxes for the first and second quarters of 1998.
Investment activities used $3.5 million and $0.7 million for the six months
ended June 30, 1998 and 1997, respectively. Investment expenditures have
primarily been to purchase the stock of Estudio Q and the remaining interest in
PT Hagler Bailly Indonesia, the continued capital expenditures for information
technology, software development and other resources necessary for the growth of
the Company.
Financing activities provided $11.2 million and $2.6 million for the six
months ended June 30, 1998 and 1997, respectively. The funds were provided
primarily through the issuance of common stock in connection with the private
placement mentioned above, and in 1997, primarily through the use of the
Company's credit facility. Net proceeds from equity financing are invested in
short-term, interest-bearing investment grade securities.
The Company's primary source of liquidity for the past twelve months has
been cash flows from financing, periodically supplemented by borrowings under a
bank line of credit. During the year ended December 31, 1997, the Company,
through two of its subsidiaries, established a $15 million revolving credit
facility and began borrowing under the facility. The balance under the line of
credit at June 30, 1998 was $0.2 million. Currently, the Company is evaluating
proposals to increase its bank line of credit to $50 million. The Company
believes that current projected levels of cash flows and the availability of
financing, including borrowings under the Company's current and proposed credit
facility, will be adequate to fund its anticipated cash needs, which may include
future acquisitions of complementary businesses, for at least the next 12
months. The Company, depending on market conditions, may consider other sources
of financing, including equity financing.
Prior to its acquisition by Hagler Bailly and consistent with its dividend
policy, Izsak Grapin paid cash dividends of $333,315 in 1998.
The Company currently anticipates that it will retain all of its earnings
for development of the Company's business and does not anticipate paying any
cash dividends in the foreseeable future.
Year 2000
The Year 2000 ("Y2K") issue is a result of certain information systems
and programs using a two-digit format, as opposed to four digits, to indicate
the years. Such systems and programs will be unable to correctly interpret dates
beyond the year 1999, which could lead to system failure or certain other
problems, leading to disruption in operations. The Company is currently
developing a plan for Y2K information systems compliance. The Company has
completed a preliminary evaluation of its domestic systems and does not
anticipate incurring any material costs in connection with assuring that they
are Y2K compliant.
In the Company's networked systems area, all applications have been
identified as Y2K compliant due to their recent scheduled upgrade. The Company's
core financial and reporting systems are not Y2K compliant but the Company has
already scheduled their replacement by early 1999. In addition, the Company
anticipates being provided with a Y2K compliant upgrade to its current core
financial and reporting systems software by the end of August 1998. The Company
believes it will incur a cost of approximately $2.0 million to replace the core
financial and reporting systems. This cost was budgeted for 1998 along with the
networked systems upgrade and is not considered by the Company as a cost
incurred to ensure Y2K compliance. The Company has not yet assessed the cost of
ensuring Y2K compliance of its embedded systems but does not anticipate
incurring material costs in connection with such compliance.
The Company has not yet assessed the Y2K compliance of (i) its foreign
operations or (ii) its suppliers and customers. The Company anticipates
undertaking an assessment of the costs of ensuring Y2K compliance of its foreign
operations by the end of 1998. The Company is also currently planning an
assessment of its exposure to Y2K non-compliance by its suppliers and customers.
At the present time, the Company's management believes that the costs
associated with Y2K compliance should not have a material adverse effect on the
results of operations or financial position of the Company in future periods.
Nevertheless, the Company is not certain that it has fully identified all
potential impacts or effects on it that could result from Y2K non-compliance,
either internally or with respect to the various third-party enterprises with
which it interacts.
PART II
Item 1. Legal Proceedings
Hagler Bailly's indirect subsidiary, Theodore Barry & Associates, is a
defendant in a lawsuit brought in the United States District Court for the
Northern District of Illinois, Michael A. Laros v. Theodore Barry & Associates,
No. 95-C4175, by one of its former executives seeking payment of a bonus and
salary allegedly due him and payment of principal and interest on a subordinated
note of TB&A held by Mr. Laros, prejudgment interest and costs and fees. TB&A is
defending the suit. Hagler Bailly does not believe that the resolution of this
lawsuit will have a material adverse effect on its business, financial condition
or results of operations.
Apogee Research, Inc. ("Apogee"), one of Hagler Bailly's wholly owned
subsidiaries, has received a subpoena from the Office of the Inspector General
of the Environmental Protection Agency (the "EPA") requesting records from April
1993 through October 1995 pertaining to a contract between Apogee and the EPA.
The work under this contract has been completed. The subpoena was served in
connection with an EPA investigation relating to the submission of potential
false statements and false claims under the contract. Hagler Bailly is unable to
determine at this time what effect, if any, the investigation will have on its
business, financial condition or results of operations.
Hagler Bailly and its subsidiaries are from time to time parties to
litigation arising in the ordinary course of business. Neither Hagler Bailly nor
any of its subsidiaries is a party to any pending material litigation nor are
any of them aware of any pending or threatened litigation that would have a
material adverse effect on Hagler Bailly or its business.
Item 2. Changes in Securities
On April 30, 1998 the Company acquired Estudio Q S.R.L. ("Estudio Q"),
an Argentinean company, for cash and stock. The Company issued 64,306 shares of
the Company's common stock to the shareholders of Estudio Q. The shares of
common stock issued in connection with the acquisition were exempt from
registration because they were issued in a transaction outside the jurisdiction
of the United States.
On June 16, 1998 Cap Gemini America, Inc. purchased 470,975 shares of
the Company's common stock for $12.5 million. The shares of common stock issued
in connection with this transaction were exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933.
On June 30, 1998 the Company acquired all the stock of Izsak Grapin
("IGA"), a French company. The Company issued 183,550 shares of the Company's
common stock to the shareholders of IGA. The shares of common stock issued in
connection with this acquisition were exempt from registration because they were
issued in a transaction outside the jurisdiction of the United States.
The Company issued 3,457 shares of its common stock in June 1998 to one
of its officers upon exercise of options. The shares of common stock issued in
connection with this transaction were exempt from registration pursuant to
Section 4(2) of the Securities Act 1933.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of stockholders held on May 14, 1998,
the stockholders voted on the election of two directors to the Company's Board
of Directors. Vinod K. Dar and Fred M. Schriever were elected to serve a
three-year term ending at the 2001 annual meeting of stockholders. The voting
for each director was as follows: <TABLE> <CAPTION>
<S> <C> <C>
Name For Withheld
Vinod K. Dar 6,635,056 59,561
Fred M. Schriever 6,682,491 12,126
</TABLE>
At the meeting, the stockholders also voted on the ratification of the
selection, by the Audit Committee of the Board of Directors of the Company, of
Ernst & Young LLP as independent auditors of the Company for its fiscal year
ending December 31, 1998.
For Against Abstain
6,693,187 1,400 30
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description
<S> <C>
2 Sale Agreement between RCG International, Inc., and Hagler Bailly Consulting, Inc. (1)
2.1 Agreement and Plan of Merger by and among Hagler Bailly, Inc., Hagler Bailly Acquisition
Corp. 1997-1 and Apogee Research, Inc., dated as of November 18, 1997. (3)
2.2 Agreement and Plan of Merger by and among Hagler Bailly, Inc., PHB Acquisition Corp. and
Putnam, Hayes and Bartlett, Inc., dated as of June 11, 1998. (5)
3.1 Amended and Restated Certificate of Incorporation of the Company (1)
3.2 By-Laws of the Company, as amended
4 Specimen Stock Certificates (1)
4.1 Escrow Agreement dated December 1, 1997 by and among Hagler Bailly, Inc., Hagler Bailly
Acquisition Corp. 1997-1, Richard R. Mudge as Stockholders' Representative and State Street
Bank and Trust Company, as Escrow Agent. (3)
4.2 Registration Rights Agreement dated November 18, 1997 by and between Hagler Bailly, Inc. and
Richard R. Mudge, acting as Stockholders' Representation. (3)
10.1 Hagler Bailly, Inc. Amended and Restated 1996 Employee Incentive and Non-Qualified Stock
Option and Restricted Stock Plan (including forms of option agreements). (1)
10.2 Form of Non-Compete, Confidentiality and Registration Rights Agreement between the Company
and each stockholder. (1)
10.3 Form of Amended and Restated Employment Agreement between the Company and Henri-Claude A.
Bailly. (1)
10.4 Lease by and between Wilson Boulevard Venture and RCG/Hagler Bailly, Inc. dated October 25,
1991. (1)
10.5 First Amendment to Lease by and between Wilson Boulevard Venture and RCG/Hagler Bailly,
Inc., dated February 26, 1993. (1)
10.6 Second Amendment to Lease by and between Wilson Boulevard Venture and RCG/Hagler Bailly,
Inc., dated December 12, 1994. (1)
10.7 Lease by and between Bresta Futura V.B.V. and Hagler Bailly Consulting, Inc. dated May 8,
1996. (1)
10.8 Lease by and between L.C. Fulenwider, Inc., and RCG/Hagler Bailly, Inc. dated December 14,
1994. (1)
10.9 Lease by and between University of Research Park Facilities Corp. and RCG/Hagler Bailly,
Inc., dated April 1, 1995. (1)
10.10 Credit Agreement by and between Hagler Bailly Consulting, Inc. and State Street Bank and
Trust Company, dated May 17, 1995. (1)
10.11 Amendment to Credit Agreement by and between Hagler Bailly Consulting, Inc. and State Street
Bank and Trust Company, dated as of June 20, 1996. (1)
10.12 Extension Agreement by and between Hagler Bailly Consulting, Inc. and State Street Bank and
Trust Company, dated as of August 1, 1996. (1)
10.13 Amendment to Credit Agreement by and between Hagler Bailly Consulting, Inc. and State Street
Bank and Trust Company, dated as of November 12, 1996. (1)
10.14 Term Note by and between Hagler Bailly Consulting, Inc., and State Street Bank and Trust
Company, dated May 26, 1995. (1)
10.15 Revolving Credit Note by and between Hagler Bailly Consulting, Inc. and State Street Bank
and Trust Company dated May 26, 1995. (1)
10.16 Amendment to Credit Agreement by and between Hagler Bailly Consulting, Inc., and State
Street Bank and Trust Company, dated as of June 12, 1997. (1)
10.17 Credit Agreement by and among Hagler Bailly Consulting, Inc., Hagler Bailly Services, Inc.
and State Street Bank and Trust Company, dated as of September 30, 1997. (2)
10.18 Promissory Note by Hagler Bailly Consulting, Inc. and Hagler Bailly Services, Inc. to State
Street Bank and Trust Company, dated September 30, 1997. (2)
10.19 Security Agreement by and between Hagler Bailly Consulting, Inc. and State Street Bank and
Trust Company, dated as of September 30, 1997. (2)
10.20 Security Agreement by and between Hagler Bailly Services, Inc. and State Street Bank and
Trust Company, dated as of September 30, 1997. (2)
10.21 Guaranties by Hagler Bailly, Inc. to State Street Bank and Trust Company, dated September
30, 1997. (2)
10.22 Guaranties by HB Capital, Inc. to State Street Bank and Trust Company, dated September 30,
1997. (2)
10.23 Subordination Agreement and Negative Pledge/Sale Agreement by and between Hagler Bailly,
Inc. and State Street Bank and Trust Company for Hagler Bailly Consulting, Inc., dated
September 30, 1997. (2)
10.24 Subordination Agreement and Negative Pledge/Sale Agreement by and between Hagler Bailly,
Inc. and State Street Bank and Trust Company for Hagler Bailly Services, Inc., dated
September 30, 1997. (2)
10.25 Guaranty of Monetary Obligations to Bresta Futura V.B.V. by Hagler Bailly, Inc., dated July
23, 1997. (2)
10.26 Amendment to Credit Agreement by and between Hagler Bailly Consulting, Inc. and State Street
Bank and Trust Company dated May 18, 1998.
10.27 Sublease Agreement by and between Coopers and Lybrand L.L.P. and Hagler Bailly, Inc. dated
December 5, 1997.
21 Subsidiaries (4)
24 Powers of Attorney (included on Signature Pages) (1)
27.1 Financial Data Schedule - June 30, 1998
27.2 Restated Financial Data Schedule - March 31, 1998
27.3 Restated Financial Data Schedule - December 31, 1997
27.4 Restated Financial Data Schedule - September 30, 1997
27.5 Restated Financial Data Schedule - June 30, 1997
27.6 Restated Financial Data Schedule - March 31, 1997
27.7 Restated Financial Data Schedule - December 31, 1996
- - -------------------------------------------------------------------------------------------------------------------
(1) Included in the Company's Registration Statement on Form S-1 (No. 333-22207)
(2) Included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1997.
(3) Included in the Company's Current Report on Form 8-K filed on December 16, 1998.
(4) Included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
(5) Included in the Company's Proxy Statement for Special Meeting of Stockholders dated July 27,
1998 on Form DEF 14A.
</TABLE>
(b) Reports on Form 8-K
On June 12, 1998 the Company filed a current report on Form 8-K, which
restated the Hagler Bailly's 1997 audited financial statements to reflect the
merger of one of the Company's wholly owned subsidiaries with and into TB&A
Group, Inc. which took place after December 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 14, 1998 -----------------------
Henri-Claude Bailly
President, Chief Executive Officer and
Chairman of the Board
/s/ Daniel M. Rouse
-------------------
Date: August 14, 1998 Daniel M. Rouse
Vice President, Chief Financial
Officer and Treasurer
EXHIBIT 3.2
HAGLER BAILLY, INC.
BYLAWS
ARTICLE I OFFICES
1.1 Registered Office: The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
1.2 Other Offices: The corporation may also have offices at such other
places both within and without the State of Delaware as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 Place of Meetings: All meetings of the stockholders for the
election of directors shall be held at such place either within or without the
State of Delaware as shall be designated from time to time by the board of
directors and stated in the notice of the meeting. Meetings of stockholders for
any other purpose may be held at such time and place, within or without the
State of Delaware, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
2.2 Date of Annual Meeting: Annual meetings of stockholders, commencing
with the year 1996, shall be held on the first Wednesday of May, if not a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 o'clock A.M., or at such other date and time as shall be designated from
time to time by the board of directors and stated in the notice of the meeting,
at which they shall elect by a plurality vote a board of directors, and transact
such other business as may properly be brought before the meeting.
2.3 Notice of Annual Meeting: Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting.
2.4 Stockholders List: The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholders, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
2.5 Special Meetings: Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president and shall be called
by the president or secretary at the request in writing of a majority of the
board of directors, or at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
2.6 Notice of Special Meetings: Written notice of a special meeting
stating the place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be given not less than ten nor more than
sixty days before the date of the meeting, to each stockholder entitled to vote
at such meeting.
2.7 Business Transacted at Special Meeting: Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in the
notice.
2.8 Quorum: The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
2.9 Vote Required: When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
2.10 Voting: Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
At all elections of the directors of the corporation each stockholder having
voting power shall be entitled to exercise the right to cumulative voting, but
only if so provided in the certificate of incorporation.
2.11 Action Without Meeting: Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
3.1 Number of Directors: The first board shall consist of a minimum of
one (1) director. Thereafter, the number of directors shall be determined by
resolution of the board of directors or by the stockholders at the annual
meeting. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 3.2 of these ByLaws, and each
director elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
3.2 Vacancies: Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual election and until their successors are duly elected and shall qualify,
unless sooner displaced. If there are no directors in office, then an election
of directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
3.3 Powers of Directors: The business of the corporation shall be
managed by or under the direction of its board of directors which may exercise
all such powers of the corporation and do all such lawful acts and things as are
not by statute or by the certificate of incorporation or by these bylaws
directed or required to be exercised or done by the stockholders.
3.4 Place of Meetings: The board of directors of the corporation may
hold meetings, both regular and special, either within or without the State of
Delaware.
3.5 First Meeting: The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors or as shall be specified in a written
waiver signed by all of the directors.
3.6 Regular Meetings: Regular meetings of the board of directors may
beheld without notice at such time and at such place as shall from time to time
be determined by the board.
3.7 Special Meetings: Special meetings of the board may be called by
the president without notice to each director; special meetings shall be called
by the president or secretary in like manner and on like notice on the written
request of two directors unless the board consists of only one director; in
which case special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of the sole director.
3.8 Quorum; Vote Necessary: At all meetings of the board, a majority of
the directors shall constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
3.9 Action Without Meeting: Unless otherwise restricted by the
certificate of incorporation or these bylaws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may betaken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.
3.10 Telephonic Communications: Unless otherwise restricted by the
certificate of incorporation or these bylaws, members of the board of directors,
or any committee designated by the board of directors, may participate in a
meeting of the board of directors, or any committee, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
3.11 Committees of Directors: The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees,
including a Management Committee, each committee to consist of one or more of
the directors of the corporation. The board may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
3.12 Minute of Committees: Each committee shall keep regular minutes of
its meetings and report the same to the board of directors when required.
3.13 Compensation of Directors: Unless otherwise restricted by the
certificate of incorporation or these bylaws, the board of directors shall have
the authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the board of directors
and may be paid a fixed sum for attendance at each meeting of the board of
directors or a stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
3.14 Removal of Directors: Unless otherwise restricted by the
certificate of incorporation or by law, any director or the entire board of
directors may be removed, with or without cause, by the holders of a majority of
shares entitled to vote at an election of directors.
ARTICLE IV
NOTICES
4.1 Form: Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
4.2 Waiver: Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
ARTICLE V OFFICERS
5.1 Officers Required: The officers of the corporation shall be chosen
by the board of directors and shall be a chairman of the board, a president, a
chief financial officer/treasurer and a secretary. The board of directors may
also choose one or more vice-presidents, and one or more assistant secretaries
and assistant treasurers. Any number of offices may be held by the same person,
unless the certificate of incorporation or these bylaws otherwise provide.
5.2 Election by Directors: The board of directors at its first meeting
after each annual meeting of stockholders shall choose a chairman of the board,
a president, chief financial officer/treasurer and a secretary.
5.3 Other Officers: The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
5.4 Salaries: The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
5.5 Term; Removal; Vacancy: The officers of the corporation shall hold
office until their successors are chosen and qualify. Any officer elected or
appointed by the board of directors may be removed at any time by the
affirmative vote of a majority of the board of directors. Any vacancy occurring
in any office of the corporation shall be filled by the board of directors.
5.6 Chairman of the Board: The chairman of the board, who shall be
chosen by and from among the directors, shall (when present) preside at all
meetings of the board of directors and shareholders, and shall ensure that all
orders and resolutions of the board of directors and shareholders are carried
into effect. The chairman of the board shall keep himself informed of the
affairs of the corporation, shall advise and counsel with the president, and, in
the president's absence, with other officers of the corporation and shall
perform such other duties as may from time to time be assigned to him by the
board of directors.
5.7 President: The president shall be the chief executive officer of
the corporation, and shall have general and active management of the business of
the corporation. The president shall be a member of the board of directors, and
in the absence of the chairman of the board, shall preside at meetings of the
board and the stockholders. If there is no chairman of the board, the president
shall have the duties of the chairman of the board.
5.8 President's Execution of Contracts: The President shall execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent of
the corporation.
5.9 Vice-President's Duties: In the absence of the president or in the
event of his inability or refusal to act, the vice-president (or in the event
there be more than one vice-president, any executive vice president, then any
senior vice president, then any vice president, in each case in the order of
their election) shall perform the duties of the president, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
5.10 Secretary's Duties: The secretary shall attend all meetings of the
board of directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the board of directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as maybe prescribed by the board
of directors or president, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an assistant
secretary shall have authority to affix the same to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature.
5.11 Assistant Secretary's Duties: the assistant secretary, or if there
be more than one, the assistant secretaries in the order determined by the board
of directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
5.12 Chief Financial Officer/Treasurer's General Duties: The chief
financial officer/treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all monies
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
5.13 Chief Financial Officer/Treasurer to Disburse Funds: He shall
disburse the funds of the corporation as may be ordered by the board of
directors, taking proper vouchers for such disbursements, and shall render to
the president and the board of directors, at its regular meetings, or when the
board of directors so requires, an account of all his transactions as chief
financial officer and of the financial condition of the corporation.
5.14 Chief Financial Officer/Treasurer's Bond: If required by the board
of directors, he shall give the corporation a bond (which shall be renewed every
six years) in such sum and with such surety or sureties as shall be satisfactory
to the board of directors for the faithful performance of the duties of his
office and for the restoration to the corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the corporation.
5.15 Assistant Treasurer's Duties: The assistant treasurer, or if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the chief financial officer/treasurer
or in the event of his inability or refusal to act, perform the duties and
exercise the powers of the chief financial officer/treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE VI
6.1 Certificate of Stock: Every holder of stock in the corporation
shall be entitled to have a certificate, signed by, or in the name of the
corporation by, the chairman or vice-chairman of the board of directors, or the
president or a vice-president and the treasurer or an assistant treasurer, or
the secretary or an assistant secretary of the corporation, certifying the
number of shares owned by him in the corporation. Certificates may be issued for
partly paid shares and in such case upon the face or back of the certificates
issued to represent any such partly paid shares, the total amount of the
consideration to be paid therefor, and the amount paid thereon shall be
specified. If the corporation shall be authorized to issue more than one class
of stock, or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights or each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
6.2 Signatures: Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
6.3 Lost Certificates: The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
6.4 Transfer of Stock: Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
6.5 Fixing Record Date: In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
6.6 Registered Stockholders: The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
7.1 Dividends: Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation.
7.2 Reserves: Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
7.3 Annual Statement: The board of directors shall present at each
annual meeting, and at any special meeting of the stockholders when called for
by vote of the stockholders, a full and clear statement of the business and
condition of the corporation.
7.4 Checks: All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
7.5 Fiscal Year: The fiscal year of the corporation shall be determined by
the Board of Directors.
------------
7.6 Seal: The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
8.1 Actions By Third Parties: The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
8.2 Actions By or In the Right of the Corporation: The corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only to
the extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
8.3 Expenses of Successful Defense: To the extent that a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
Sections8.l and 8.2 of these bylaws, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
8.4 Determination That Indemnification Is Proper: Any indemnification
under Sections 8.1 and 8.2 of these bylaws, (unless ordered by a court) shall be
made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Sections 8.1 and 8.2 of these bylaws. Such determination
shall be made (l) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
8.5 Advances: Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the board
of directors in the specific case upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this section.
8.6 Provisions Not Exclusive: The indemnification provided by this
Article VIII shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
8.7 Insurance: The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article VIII.
8.8 Constituent Corporation: For purposes of this Article VIII,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify the
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Article VIII with respect to the resulting or surviving corporation as
he would have with respect to such constituent corporation if its separate
existence had continued.
8.9 Other Enterprises; Fines; Services: For purposes of this Article
VIII, references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the request
of the corporation" shall include any service as a director, officer, employee
or agent of the corporation which imposes duties on, or involves services by,
such director, officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interest of the corporation" as referred to in
this Article VIII.
8.10 Continuation of Indemnification and Advancement of Expenses: The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article VIII shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
ARTICLE IX
AMENDMENTS
9.1 Amendments by Stockholders or Directors: These bylaws may be
altered, amended or repealed or new bylaws may be adopted by the stockholders or
by the board of directors, when such power is conferred upon the board of
directors by the certificate of incorporation at any regular meeting of the
stockholders or of the board of directors or at any special meeting of the
stockholders or of the board of directors if notice of such alteration,
amendment, repeal or adoption of new bylaws be contained in the notice of such
special meeting. If the power to adopt, amend or repeal bylaws is conferred upon
the board of directors by the certificate of incorporation it shall not divest
or limit the power of the stockholders to adopt, amend or repeal bylaws.
EXHIBIT 10.26
AMENDMENT TO CREDIT
AGREEMENT
THIS AGREEMENT, dated as of May 18, 1998, by and among Hagler Bailly
Consulting, Inc., a Delaware corporation ("Consulting"), Hagler Bailly Services,
Inc., a Delaware corporation ("Services"), and State Street Bank and Trust
Company (the "Bank"). Consulting and Services are sometimes herein referred to
collectively as the "Borrowers" and each individually as a "Borrower".
WITNESSETH:
WHEREAS, the Borrowers and the Bank are parties to that certain Credit
Agreement dated as of September 30, 1997 (the "Credit Agreement"); and
WHEREAS, -the parties wish to amend the Credit Agreement in the manner
hereinafter set forth;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used herein without definition which
are defined in the Credit Agreement shall have the respective meanings ascribed
to them in the Credit Agreement.
2. Amendments to Credit Agreement. The Credit Agreement is hereby amended
as follows:
2.1 Subsection 7.4 of the Credit Agreement is amended by
deleting the figure "320 % " appearing therein and by inserting in lieu thereof
the figure "250 % ".
2.2 Exhibit B to the Credit Agreement (being the form of
Compliance Certificate) is amended by deleting the figure "320%" appearing in
item 6(d) thereof and by inserting in lieu thereof the figure "250%".
2.3 It is the intention of the parties that the foregoing
amendments shall be effective for the twelve-month periods ending June 30, 1998
and on the last day of each fiscal quarter of the Borrowers thereafter.
3. Miscellaneous.
3.1 As modified hereby, the provisions of the Credit Agreement shall
continue in full force and effect.
3.2 This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of the
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
a sealed instrument as of the date first above written.
HAGLER BAILLY CONSULTING, INC.
By /s/ Daniel M. Rouse
Vice President, Chief Financial Officer,
Treasurer and Secretary (Title)
HAGLER BAILLY SERVICES, INC.
By /s/ Alain M. Streicher
Chief Executive Officer and
Managing Director (Title)
STATE STREET BANK AND TRUST
COMPANY
By /s/ F. Andrew Beise
Vice President (Title)
EXHIBIT 10.27
SUBLEASE
THIS SUBLEASE is made and entered into on this 5th day of December,
1997 by and between (i) COOPERS & LYBRAND L.L.P., a limited liability
partnership registered in the State of Delaware ("Sublandlord") and (ii) HAGLER
BAILLY, INC., a Delaware corporation ("Subtenant").
Recitals:
A. Sublandlord, as tenant, has entered into an Office Lease dated
December 12, 1991 with Wilson Boulevard Venture, as landlord, pursuant to which
Sublandlord agreed to lease approximately 51,036 square feet of space in the
office building situated at 1530 Wilson Boulevard, Arlington, Virginia. Such
Office Lease was subsequently amended by a First Amendment to Lease dated
September 29, 1994 between Sublandlord, as tenant, and Bresta Futura V B.V.
("Landlord") , as landlord and as successor in interest of Wilson Boulevard
Venture. Pursuant to the First Amendment to Lease, Sublandlord agreed to lease
an additional 7,366 square feet of space, for a total of 58,402 square feet.
Such Office Lease, as amended by the First Amendment to Lease, is attached
hereto as Exhibit A and is herein referred to as the "Master Lease". Capitalized
terms used herein and not otherwise defined herein shall have the meanings set
forth in the Master Lease.
B. Sublandlord desires to sublease to Subtenant, and Subtenant desires
to sublease from Sublandlord, the entire Leased Premises under the Master Lease,
being approximately 58,402 square feet of space, and Sublandlord and Subtenant
desire to set forth herein their agreements and understandings respecting such
sublease.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
understandings and agreements set forth herein, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Sublandlord and Subtenant hereby agree as follows:
1. Subleased Premises. Sublandlord agrees to lease to Subtenant and
Subtenant agrees to lease from Sublandlord, upon the terms and conditions
hereinafter provided, the Leased Premises under the Master Lease, consisting of
approximately 58,402 square feet comprising the entire 3rd 4th and 5th floors of
the Building and 7,366 square feet of space located on the 6th floor of the
Building. The Leased Premises are designated on Exhibit B attached hereto.
2. Term; Delay in Delivery of Possession.
A. The term of this Sublease shall commence on February 14,
1998 or such later date as Sublandlord shall deliver possession of the Leased
Premises to Subtenant ("Sublease
<PAGE>
Commencement Date") , and shall expire on February 27, 2002. Sublandlord shall
use good faith efforts to deliver the Leased Premises to Subtenant by February
14, 1998. On request, Sublandlord will furnish Subtenant with progress reports
of Sublandlord's plans to vacate the Leased Premises.
B. If Sublandlord has not delivered possession of the Leased
Premises to Subtenant in the condition required by Section 3 hereof by March 2,
1998, Subtenant shall have the -right and option to elect either to (i)
terminate this Sublease, or (ii) take occupancy of the Leased Premises when
Sublandlord is able to' deliver possession of the Leased Premises to Subtenant.
Such election shall be made by Subtenant's giving Sublandlord a notice of such
election not later than March 16, 1998. If Subtenant fails to give such notice
on or prior to March 16, 1998, such failure shall be deemed an election by
Subtenant to take occupancy of the Leased Premises when Sublandlord is able to
deliver possession of the Leased Premises to Subtenant. In the event Subtenant
elects to terminate this Sublease in accordance with the foregoing provisions of
this Section 2B, this Sublease shall be terminated as of March 2, 1998 and
neither Sublandlord nor Subtenant shall have any further liability to the other
hereunder, or otherwise, it being understood and agreed that Sublandlord shall
not be liable to Subtenant for any damages Subtenant may have incurred in
connection with Subtenant's election to terminate this Sublease as aforesaid. In
the event that Subtenant elects (or is deemed to have elected) to take occupancy
of the Leased Premises when Sublandlord is able to deliver possession of the
Leased Premises to Subtenant, then the Abatement Period (as such term is defined
in Section 7 below) shall be lengthened by one-half (1/2) day for each day after
March 2, 1998 that Sublandlord has not delivered possession of the Leased
Premises to Subtenant.
C. Notwithstanding the provisions of Section 2B above, if (i)
Subtenant has the right to terminate this Sublease under the provisions of
Section 2B above by reason of a delay in delivering possession of the Leased
Premises to Subtenant past March 2, 1998, but Subtenant does not elect to do so,
and (ii) such delay in delivering the Leased Premises is caused by an event of
"Force Majeure", then the Abatement Period will not be lengthened. In the event
of such a Force Majeure delay, Sublandlord will deliver possession of the Leased
Premises to Subtenant when Sublandlord is able to do so given the circumstances
of the Force Majeure event, and the Sublease Commencement Date will occur on the
date the Leased Premises are delivered to Subtenant. For these purposes, "Force
Majeure" means an Act of God, labor strikes, lockouts or other labor
difficulties, casualty to the Building and/or the Leased Premises, or any other
cause beyond the control of Sublandlord which prevents Sublandlord from
delivering possession of the Leased Premises to Subtenant on or prior to March
2, 1998.
Further, if Sublandlord is not able to deliver possession of the Leased Premises
to Subtenant on or prior to March 2, 1998 and Subtenant elects to take occupancy
of the Leased Premises when Sublandlord is able to deliver possession of the
Leased Premises to Subtenant, Sublandlord shall not be liable to Subtenant for
damages or otherwise, the only liability of Sublandlord being the lengthening of
the Abatement Period as set forth in Section 2B above. The occurrence of a Force
Majeure event shall not affect Subtenant's right to terminate this Sublease as
set forth in Section 2B.
3. Condition of Leased Premises. Subtenant agrees to lease the Leased
Premises in their "as is" condition on and as of the Sublease Commencement Date,
without any warranty whatsoever, express or implied. Subtenant acknowledges and
agrees that it will have inspected the Leased Premises, and will be satisfied
with their condition, prior to the Sublease Commencement Date. The Leased
Premises are to be vacant, with all of Sublandlord's property not sold to
Subtenant removed. The Leased Premises will be delivered to Subtenant in "broom
clean" condition.
4. Personal Property. Sublandlord agrees that the personal
property listed on Exhibit C (the "Personal Property") will remain in the Leased
Premises on the Sublease Commencement Date, will be sold to Subtenant (pursuant
to a Bill of Sale to be executed and delivered by Sublandlord on the Sublease
Commencement Date), and will become the property of Subtenant as of the Sublease
Commencement Date. Subtenant agrees that the Personal Property is being conveyed
by Sublandlord to Subtenant in an "as is", "where is" condition, and that
Sublandlord makes absolutely no warranty or representation whatsoever, express
or implied, concerning the Personal Property or its fitness for use by
Subtenant. The Personal Property will be removable by Subtenant, and Sublandlord
hereby subordinates any statutory or common law "landlord lien" rights
Sublandlord may have in respect of the Personal Property to the lien of any bona
fide financings placed on the Personal Property by Subtenant. Subtenant agrees
to pay Sublandlord, as the purchase price for the Personal Property, the sum of
$275,000. Such amount shall be paid by Subtenant's giving Sublandlord a credit
in such amount against the Subtenant Allowance Sublandlord is obligated to
provide under the provisions of Section 5 below. If any sales tax is payable in
respect of the sale of the Personal Property to Subtenant, the payment of such
sales tax shall be the responsibility of Sublandlord.
5. Subtenant Allowance. Sublandlord shall pay to Subtenant an
allowance (the "Subtenant Allowance") to be used by Subtenant to offset in part
its costs in improving the Leased Premises and moving into the Leased Premises.
Subtenant's particular use of the Subtenant Allowance shall be unrestricted, so
long as it is used generally in connection with Subtenant's move to, or use
(e.g., furniture, cabling, decoratin4, construction, and the like) and occupancy
of, the Leased Premises. The total amount of the Subtenant Allowance shall be
$292, 010 (i.e., $5.00 per square foot of the Leased Premises) The Subtenant
Allowance shall be reduced by the credit to be provided Sublandlord as set forth
in Section 4 hereof. Sublandlord shall pay the Subtenant Allowance to Subtenant
on a periodic basis within thirty (30) days after Subtenant submits to
Sublandlord invoices or other evidence that Subtenant has incurred the costs
covered by the Subtenant Allowance. Subtenant shall submit such invoices or
other evidence not more often than once every 30 days. Any unused portion of the
Subtenant Allowance shall be applied against the first installment(s) of Base
Rent coming due after the period in which the payment of Base Rent is abated
under the provisions of Section 7 below.
6. Base Rent.
A. Subtenant shall pay as base rent ("Base Rent") for the
Leased Premises for the first Rent Year an amount equal to One Million Five
Hundred Seventy-Six Thousand Eight Hundred Fifty-four Dollars ($1,576,854). For
purposes of this Sublease, the term "Rent Year" means a period of twelve months
beginning on the Sublease Commencement Date and each anniversary thereof. The
last Rent Year shall be a partial year ending on February 27, 2002, and Base
Rent for such partial year shall be appropriately prorated.
B. Base Rent for each Rent Year after the first Rent Year
shall be increased by an amount equal to 2.5% of the Base Rent for the previous
Rent Year (that is, such increases shall be cumulative) . Except as provided in
this Section 6B, Base Rent shall not be increased during the term of this
Sublease. Subtenant shall not be liable for the payment of any "CPI Adjustment
Amount" as provided in the Master Lease.
C. Base Rent shall be payable in equal monthly installments,
in advance, on the first day of each month during the term of this Sublease,
except that the first monthly payment of Base Rent shall be due on the first day
of the month next following the expiration of the Base Rent Abatement Period set
forth in Section 7 hereof, and shall include Base Rent payable in respect of any
partial month occurring after the expiration of the Base Rent Abatement Period.
Base Rent for any partial month shall be prorated on a daily basis. Payments of
Base Rent (and any other amounts payable by Subtenant under this Sublease) shall
be made without any set-off, abatement or deduction whatsoever and without
demand, except as otherwise expressly provided by this Sublease. Base Rent and
all other amounts payable by Subtenant under this Sublease shall be payable at
such address as Sublandlord may designate from time to time by written notice to
Subtenant.
7. Abatement of Base Rent. Subject to the provisions of Section 2B
above, the payment of Base Rent shall be abated for the one hundred twenty (120)
- - -day period commencing on the Sublease Commencement Date (the "Abatement
Period")
8. Operating Expense Increases.
A. For each Sublease Year after the Base Year during the term
of this Sublease, Subtenant shall pay to Sublandlord Subtenant's Share of the
amount by which the operating Expenses (subject to adjustment pursuant to
Section 4C of the Master Lease) for such Sublease Year exceed the Operating
Expenses for the Base Year.
B. Subtenant's Share of Operating Expenses shall be
calculated and paid on an estimated, monthly basis in the same manner as
Tenant's Share of Operating Expenses are calculated and paid under Paragraph 4
of the Master Lease. After the end of each Sublease Year following the Base Year
and promptly after Sublandlord receives the same, Sublandlord shall deliver to
Subtenant a copy of Landlord's annual statement of Operating Expenses, and
Subtenant's Share of Operating Expenses shall be based on such statement.
Sublandlord shall not be liable for any errors in such statement or errors of
Landlord in calculating Operating Expenses. At Subtenant's request and expense,
however, Sublandlord will pursue, on behalf of Subtenant, any rights which
Sublandlord may have under the Master Lease in respect of the payment of
Tenant's Share of Operating Expenses thereunder. If Landlord's annual statement
of Operating Expenses for a calendar year discloses that Subtenant's estimated
payments on account of such Operating Expenses exceeds Subtenant's required
Operating Expense contribution for such calendar year calculated in accordance
with Section 8A, Sublandlord shall promptly refund the amount of the excess to
Subtenant. Similarly, if Landlord's annual statement of Operating Expenses for a
calendar year discloses that Subtenant's estimated payments on account of such
Operating Expenses is less than Subtenant's required Operating Expense
contribution for such calendar year calculated in accordance with Section 8A,
Subtenant shall promptly pay the amount of the deficiency to Sublandlord,
subject to Subtenant's rights provided in this Section 8B. In the event that
Sublandlord received any refund of Taxes as provided in Section 4A(5) of the
Master Lease for any period within the term of this Sublease, Sublandlord shall
promptly remit such refund to Subtenant.
C. For purposes of this Section 8, the following terms shall have the following
meanings:
(1) "Base Year" shall be the calendar year 1998.
(2) "Subtenant's Share" shall mean and be the same as "Tenant's Share" under the
provisions of the Master Lease.
(3) "Sublease Year" shall mean each full calendar year during the term of this
Sublease, and in addition, the period from the Sublease ' Commencement Date
until December 31, 1998 and the period from January 1, 2002 through February 27,
2002. Calculations attributable to such partial Sublease Years shall be prorated
on a daily basis.
9. Interest and Late Payment Charges.
A. Subtenant shall pay, on demand of Sublandlord, interest
from the date that is ten (10) days after the due date of each payment becoming
due under this Sublease until paid at the rate per annum equal to three (3)
percentage points plus the Prime Rate; provided, however, that the payment of
such interest shall not excuse or cure any default by Subtenant under this
Sublease. In no event shall Subtenant be obligated to pay interest at a rate
that exceeds the maximum rate of interest permitted by law. For these purposes,
the "Prime Rate" means the prime or base commercial lending rate from time to
time announced by The Riggs National Bank of Washington, D. C., to be in effect
at its principal office in Washington, D. C.
B. Subtenant shall pay, on demand of Sublandlord, a late fee
equal to five percent (5%) of any payment becoming due under this Sublease that
is not paid by the fifth (5t') day following its due date; provided, however,
that regardless of whether such late fee constitutes or is deemed to be interest
under applicable law, the sum of all interest contracted for, charged or
received hereunder shall not exceed the maximum amount of interest allowed under
applicable law.
C. Subtenant has no obligation to pay interest or late fees
charged by Landlord under the provisions of the Master Lease, it being
understood and agreed that this Section 9 sets forth the entire obligation of
Subtenant for the payment of interest and late fees.
10. Subleasing and Assignment. Subtenant shall not (i) assign, convey,
otherwise transfer or mortgage this Sublease or any interest hereunder (ii)
permit to occur or permit to exist any assignment of this Sublease, or any lien,
pledge or encumbrance upon Subtenant's interest in this Sublease or in the
Leased Premises or any part thereof, voluntarily or by operation of law, (iii)
sublease the Leased Premises or any part thereof, or (iv) permit the use or
occupancy of the Leased Premises by any parties other than its employees and
Affiliates, without in each instance obtaining Sublandlord's prior approval,
which approval shall not be unreasonably withheld, and also complying with the
provisions of the Master Lease applicable thereto, including, without
limitation, obtaining the consent of the Landlord where the obtaining of such
consent is required.
11. No Expansion Rights, Rights of First Refusal or Renewal Rights.
Sublandlord and Subtenant acknowledge and agree that because this Sublease
covers 100% of the space leased by Sublandlord in the Building, Sublandlord's
right to expand the Leased Premises, its right of first refusal in respect of
the leasing of additional space in the Building and its right to renew the term
of the Master Lease, as such rights may be provided for in the Master Lease,
have been waived, and that Subtenant will have no such rights except as
Subtenant and Landlord may otherwise agree upon.
12. Parking. Subtenant shall have the right to lease parking spaces in the
Building's parking garage, as provided for in the Master Lease.
13. Security Deposit. Simultaneously with Subtenant's execution
hereof, Subtenant shall place with Sublandlord a security deposit in the amount
of $131,404. Such security deposit shall bear simple interest at the rate of
five percent (5%) per annum and shall be considered as security for the payment
and performance by Subtenant of all of Subtenant's obligations, covenants,
conditions and agreements under this Sublease. Upon condition that W Subtenant
has not previously defaulted any payment obligation under this Sublease (even
though such default may have been cured within the applicable grace period) ,
and (ii) Subtenant is not then in default under the provisions hereof,
Sublandlord shall return such security deposit, together with interest thereon,
to Subtenant on June 1, 1999. If such security deposit is not returned to
Subtenant on June 1, 1999 because of a failure of a condition set forth in
either clause W or (ii) of the previous sentence, upon the expiration of the
term of this Sublease, Sublandlord shall (provided that Subtenant is not then in
default under the provisions hereof), return such security deposit (plus
interest thereon) to Subtenant, less such portion thereof as Sublandlord shall
have retained to make good any default by Subtenant with respect to any of
Subtenant's aforesaid obligations, covenants, conditions or agreements. In the
event of any default by Subtenant hereunder, Sublandlord shall have the right,
but shall not be obligated, to apply all or any portion of the security deposit
to compensate Sublandlord (whether in whole or in part) for such default, in
which event, within fifteen (15) days thereafter, Subtenant shall be obligated
to deposit with Sublandlord the amount necessary to restore the security deposit
to its original amount; provided, however, neither the application of the
security deposit as set forth above nor the payment by Subtenant to restore such
security deposit shall operate to cure such default or to estop Sublandlord from
pursuing any remedy to which Sublandlord would otherwise be entitled.
14. Leasing Commission. Sublandlord shall be obligated to pay Julien J.
Studley ("Studley") a leasing commission in accordance with the provisions of a
separate agreement between Sublandlord and Studley, a copy of which is attached
hereto as Exhibit D. Sublandlord hereby agrees to indemnify and hold harmless
Landlord and Subtenant against and from any and all losses, liabilities,
damages, costs and expenses (including reasonable counsel fees) resulting from
any claims that may be made against Landlord by Subtenant or against Landlord or
Subtenant by any brokers or other persons claiming a commission or similar
compensation in connection with this Sublease. Sublandlord hereby agrees to pay
to Landlord reasonable attorneys' fees and disbursements (not to exceed five
hundred dollars ($500)) incurred by Landlord in connection with this Sublease.
Subtenant warrants and represents that it has not engaged a broker or other
agent in connection with this Sublease, except for Studley. Subtenant hereby
agrees to indemnify and hold harmless Sublandlord against and from any and all
losses, liabilities, damages, costs and expenses (including reasonable counsel
fees) resulting from any breach by Subtenant of the foregoing representation and
warranty.
15. Binding Effect of Master Lease.
A. Sublandlord represents and warrants that as of the date
hereof there is no Event of Default under the Master Lease and as of the
Sublease Commencement Date there will be no Event of Default under the Master
Lease. The provisions of the Master Lease are hereby incorporated herein by this
reference. Except as set forth in this Sublease, Subtenant shall be bound by,
and hereby agrees to abide by and perform, all of the terms conditions,
covenants and agreements to which Sublandlord is bound in its capacity as tenant
under and pursuant to the provisions of the Master Lease. In that connection,
except as set forth herein, Subtenant covenants and agrees, commencing as of the
Sublease Commencement Date, to perform the undertakings of Sublandlord (as
tenant) under the Master Lease, and to refrain from taking any action or
suffering any condition to exist which constitutes a violation of the Master
Lease. All rights and benefits accruing to Sublandlord in its capacity as tenant
under the Master Lease shall extend to Subtenant. In such connection, if
circumstances exist under which Sublandlord is entitled to an abatement of
Annual Base Rent or other payment obligation in its capacity as the tenant under
the Master Lease, then such circumstances shall also result in Subtenant's
becoming entitled to an abatement of Base Rent and other payment obligation
provided for under this Sublease (such as, for example, abatement of rent
arising by reason of an interruption in services or a casualty) . If Subtenant
does become entitled to an abatement of Base Rent or other payment obligation
under the provisions of the preceding sentence, the amount of such abatement
shall be governed by amounts due under this Sublease, not amounts due from
Sublandlord under the provisions of the Master Lease. Sublandlord will not
exercise any right to terminate the Master Lease, either by reason of a Landlord
default, a casualty or otherwise, except with Subtenant's agreement.
B. Notwithstanding any provision herein to the contrary, with
respect to work, services, utilities, repairs, parking, the operation of
equipment, alterations, improvements, repainting and restoration or the
performance of other obligations or covenants required of Landlord under the
Master Lease, Sublandlord's sole obligation with respect thereto shall be to
request the same of Landlord upon request by Subtenant. Subtenant agrees to look
solely to Landlord for the furnishing of any such services to which Sublandlord
may be entitled under the Lease in its capacity as tenant thereunder.
Sublandlord agrees to cooperate with Subtenant and use reasonable efforts to
take whatever action is reasonably required to enforce for the benefit of
Subtenant the obligations of Landlord under the Master Lease insofar as they
relate to the Leased Premises, provided that any expenses incurred by
Sublandlord shall be reimbursed by Subtenant to Sublandlord on demand.
C. Subtenant shall surrender the Leased Premises at the end of
the term of this Sublease in the condition delivered to Subtenant on the
Sublease Commencement Date, subject to reasonable wear and tear, casualty and
alterations made by Subtenant which are required or permitted to remain in the
Leased Premises under the provisions of the Master Lease. Subtenant shall have
no obligation to remove tenant improvements existing in the Leased Premises on
the Sublease Commencement Date, including, without limitation, the interior
staircase described in paragraph 38 of the Master Lease. Sublandlord shall have
responsibility for removing such interior staircase and performing the other
work required by paragraph 38 of the Master Lease (the "Paragraph 38 work"), and
Subtenant agrees to provide Sublandlord with access to the Leased Premises
during the thirty (30)-day period prior to the end of the term of this Sublease,
so that Sublandlord can timely perform the Paragraph 38 Work. Sublandlord agrees
to perform the Paragraph 38 Work in such manner so as not to unreasonably
interfere with the activities of Subtenant in the Leased Premises, and on terms
and conditions mutually agreeable to Sublandlord and Subtenant.
D. In the event that Subtenant shall be in default of any term
or provision of this Sublease, or holds over after the expiration of this
Sublease, Sublandlord shall have available to it all of the rights and remedies
available to Landlord under the Master Lease in the event of a like occurrence
on the part of the Sublandlord as tenant thereunder. Subtenant shall be entitled
to grace or cure periods in the situations provided to Sublandlord (in its
capacity as tenant) under Section 23A of the Master Lease, except that in order
to give Sublandlord sufficient time to cure any default under the Master Lease
that may be caused by Subtenant's default under this Sublease, the five (5) -day
period provided for in Section 23A(l) of the Master Lease shall be shortened to
three (3) days for a Subtenant default, and the thirty (30)-day period provided
for in Section 23A(2) of the Master Lease shall be shortened to twenty (20) days
for a Subtenant default. Further, Subtenant shall have the benefit of the
limitation on liability set forth in Section 23B(5) of the Master Lease.
16. Subordination to Master Lease; Quiet Enjoyment.
A. This Sublease is subject and subordinate to the Master
Lease and to the matters to which the Master Lease is and shall be subordinate,
and in the event of termination of the Master Lease, re-entry or dispossession
by Landlord under the Master Lease, Landlord may, at is its option, take over
all of the right, title and interest of Sublandlord under this Sublease, and
Subtenant shall, at Landlord's option, attorney to Landlord pursuant to the then
executory provisions of this Sublease, except that Landlord shall not W be
liable for any previous act or omission or negligence of Sublandlord under this
Sublease, (ii) be subject to any counterclaim, offset or defense, not expressly
provided in this Sublease, which theretofore accrued to Subtenant against
Sublandlord, or (iii) be bound by any previous modification of this Sublease or
by any previous prepayment of more than one (1) month's rent.
B. Subject to the provisions of Section 16A hereof,
Sublandlord covenants that Subtenant, on paying the rent, charges and other
payments herein reserved and on keeping, observing and performing all the other
terms, covenants, conditions, provisions and agreements herein contained on the
part of Subtenant to be kept, observed and performed, all of which obligations
of Subtenant are independent of Sublandlord's obligations under this Sublease,
shall, during the term of this Sublease, peaceably and quietly have, hold and
enjoy the Leased Premises subject to the terms, covenants, conditions,
provisions and agreements hereof, without molestation or hindrance by
Sublandlord or any party claiming through or under Sublandlord.
C. Sublandlord shall (i) timely make all payments required to
be made by Sublandlord in its capacity as tenant under the Master Lease, (ii)
perform any obligations of Sublandlord in its capacity as tenant under the
Master Lease accruing prior to the Sublease Commencement Date and (iii) refrain
from taking any action which would constitute an Event of Default under the
Master Lease.
17. Consent of Landlord under Master Lease. This Sublease shall be
effective upon Landlord, Sublandlord and Subtenant executing and delivering
duplicate originals of the Consent to Sublease in the form annexed hereto as
Exhibit E. Notwithstanding such consent of Landlord and/or any acceptance of
rent by Landlord from Subtenant, as between Landlord and Sublandlord,
Sublandlord shall remain fully liable for the payment all rent due under the
Master Lease and for the performance of all the covenants, agreements, terms,
provisions and conditions contained in the Master Lease on the part of
Sublandlord to be performed. Sublandlord further agrees that notwithstanding
this Sublease, no other and further subletting of the Leased Premises by
Sublandlord or Subtenant shall or will be made except upon compliance with and
subject to the provisions of the Master Lease.
18. Mutual Indemnity.
A. Subtenant shall and hereby agrees to indemnify and hold
Sublandlord harmless from and against any loss, damage, cost or expense incurred
by Sublandlord and in any way relating to (i) any injury to persons or damage to
property occurring in, on or about the Leased Premises during the term of this
Sublease, (ii) any work or thing whatsoever done or condition created by
Subtenant in, on or about the Leased Premises on and after the Sublease
Commencement Date, (iii) any willful or negligent act or omission of Subtenant,
its agents, contractors, employees, invitees or licensees, during the term of
this Sublease, relating to Subtenant's use and/or occupancy of the Leased
Premises or (iv) any failure by Subtenant to perform or observe any of the
covenants and obligations required of Subtenant under this Sublease or
Sublandlord under the Master Lease during the term of this Sublease, including,
but not limited to, any failure by Subtenant to pay any bills rendered by
Landlord to Subtenant for charges incurred by or imposed upon Subtenant for
services rendered and materials supplied to the Leased Premises. Subtenant shall
and hereby agrees to indemnify and hold Landlord harmless from and against any
loss, damage, cost or expense incurred by Landlord and in any way relating to
the matters set forth in clauses W through (iv) above; provided however, that
such indemnity shall not apply to any failure by Sublandlord to pay rent or
other amounts owing by Sublandlord as tenant under the Master Lease during the
term of this Sublease. The provisions of this Section 18A shall survive the
expiration or sooner termination of this Sublease.
B. Sublandlord shall and hereby agrees to indemnify and hold
Subtenant harmless from and against any loss, damage, cost or expense incurred
by Subtenant and in any way relating to (i) any injury to persons or damage to
property occurring in, on or about the Leased Premises prior to the Sublease
Commencement Date, (ii) any work or thing whatsoever done or condition created
by Sublandlord in, on or about the Leased Premises prior to the Sublease
Commencement Date, (iii) any willful or negligent act or omission of
Sublandlord, its agents, contractors, employees, invitees or licensees, prior to
the Sublease Commencement Date and relating to Sublandlord's use and/or
occupancy of the Leased Premises or (iv) any failure by Sublandlord to perform
or observe any of the covenants and obligations required of Sublandlord under
this Sublease or in its capacity as tenant under the Master Lease prior to the
Sublease Commencement Date. Notwithstanding the foregoing, the indemnity of
Sublandlord set forth in this Section 18B(i) and (ii) shall not apply to any
loss, damage, cost' or expense incurred by Subtenant and arising out of any
tenant improvement work or other activity of Subtenant in the Leased Premises
prior to the Sublease Commencement Date (without implying a right of Subtenant
to enter the Leased Premises prior to the Sublease Commencement Date).
19. Insurance. Subtenant agrees that Sublandlord shall be named as an
additional insured on all insurance policies required to be obtained by
Subtenant by reference to the Master Lease. Subtenant shall furnish to
Sublandlord certificates evidencing the aforesaid insurance coverage at least
thirty (30) days prior to the Sublease Commencement Date and the expiration
dates of such policies. All insurance policies required of Subtenant hereunder
shall provide that Sublandlord will be given at least thirty (30) days' prior
written notice of any cancellation or material change in the policy.
20. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed duly given if delivered (a) by hand or (b) a
recognized overnight delivery service (i) if to Sublandlord, Coopers & Lybrand
L.L.P., Attention: Manager, National Real Estate and Planning, One Canterbury
Green, Stamford, Connecticut 06904; and (ii) if to Subtenant, to 1530 Wilson
Boulevard, Arlington, Virginia 22209, unless notice of a change of address is
given pursuant to the provisions of this Section 20. Any notice sent in
compliance with this Section 20 shall be deemed given on the date of delivery in
the case of hand-delivery, or on the next business day in the case of Express
Mail or a recognized overnight delivery service.
21. Liability of Sublandlord. Sublandlord hereby represents and
Subtenant acknowledges that Sublandlord is a partnership registered as a limited
liability partnership in the State of Delaware. Subtenant agrees that Subtenant
shall not seek personal judgment against, or levy upon the assets of, any then
currently active, retired, withdrawn, deceased or dismissed partner of
Sublandlord, nor against or upon the assets of any such partner's spouse, family
or estate, nor against or upon the assets of any partners who are thereafter
admitted to Sublandlord (all of the foregoing being collectively referred to
herein as the "Parties"), for any amounts due or which may become due under or
by reason of this Sublease, or for the performance of any of the obligations of
Sublandlord under this Sublease, and that Subtenant shall be entitled to proceed
only against Sublandlord and the assets of Sublandlord for any such amounts or
for the performance of any such obligations. Subtenant agrees that for the
purposes of the foregoing, the assets of Sublandlord shall not include W any
negative capital accounts which may from time to time exist in Sublandlord, (ii)
any obligation of any of the Parties to contribute capital to Sublandlord,
pursuant to the partnership agreement or otherwise, or (iii) any right which the
Sublandlord or any trustee or similar person may otherwise have on behalf of
Sublandlord to require contribution from any of the Parties to satisfy debts of
Sublandlord in any bankruptcy, reorganization or similar proceeding involving
Sublandlord. In furtherance of the foregoing, Subtenant hereby waives any right
it may have to seek use and occupancy charges from any of the Parties in the
event that this Sublease is rejected by a trustee or debtor-in-possession in any
bankruptcy, reorganization or similar proceeding involving Sublandlord.
22. Sublease Profit. If and to the extent there is any Sublease Profit
arising out of this Sublease, Subtenant shall have no liability for the payment
of the same, but the existence or non-existence of any Sublease Profit shall
have no effect on the obligation of Subtenant to pay the full amount of Base
Rent or other amounts payable by Subtenant hereunder.
23. Building Directory. Subtenant shall be entitled to have its name
listed in the Building directory to the same extent as Sublandlord would be
entitled to such a listing under the provisions of the Master Lease.
24. Entire Agreement. This Sublease contains and embodies the entire
agreement of the parties hereto, and no representations, inducements or
agreements, oral or otherwise, between the parties not contained in this
Sublease shall be of any force or effect. This Sublease may not be modified,
changed or terminated in whole or in part in any manner other than by an
agreement in writing duly signed by Sublandlord, Landlord, and Subtenant.
25. Applicable Law. This Sublease shall be governed by the laws of the
Commonwealth of Virginia.
26. Successors and Assigns. This Sublease shall be binding on and inure
to the benefit of the parties hereto and their successors and permitted assigns,
subject to the restrictions on assignment contained herein and in the Master
Lease.
27. Affiliate. For purposes of this Sublease, an "Affiliate" of
Subtenant means a party controlling, controlled by or under common control with
Subtenant. "Control" means, in the case of a corporation, ownership of more than
50k of the outstanding stock of the corporation, and in the case of a
partnership, limited partnership or other non-corporate entity, ownership of
more than 50% of the beneficial interests in such entity.
IN WITNESS WHEREOF, Sublandlord and Subtenant have executed this
Sublease on the date first above-written.
Sublandlord:
COOPERS & LYBRAND L.L.P.
By: /s/ Albert Thiess
Partner and National Director for Infrastructure
Subtenant:
HAGLER BAILLY, INC.
By: /s/ Alain M. Streicher
Chief Operating Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
HAGLER BAILLY, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE]
TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,506,845
<SECURITIES> 0
<RECEIVABLES> 42,002,983
<ALLOWANCES> 1,319,358
<INVENTORY> 0
<CURRENT-ASSETS> 57,980,132
<PP&E> 7,142,869
<DEPRECIATION> 3,676,438
<TOTAL-ASSETS> 74,333,779
<CURRENT-LIABILITIES> 12,830,853
<BONDS> 0
0
0
<COMMON> 96,066
<OTHER-SE> 61,406,860
<TOTAL-LIABILITY-AND-EQUITY> 74,333,779
<SALES> 52,497,509
<TOTAL-REVENUES> 52,497,509
<CGS> 40,156,548
<TOTAL-COSTS> 40,156,548
<LOSS-PROVISION> 0
<OTHER-EXPENSES> 0
<INTEREST-EXPENSE> 125,293
<INCOME-PRETAX> 5,337,114
<INCOME-TAX> 2,081,318
<INCOME-CONTINUING> 3,255,795
<EXTRAORDINARY> 0
<CHANGES> 0
<DISCONTINUED> 0
<NET-INCOME> 3,255,795
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.33
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
HAGLER BAILLY, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE TWELVE
MONTHS ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE]
TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,967,527
<SECURITIES> 0
<RECEIVABLES> 35,588,472
<ALLOWANCES> 1,253,546
<INVENTORY> 0
<CURRENT-ASSETS> 47,676,295
<PP&E> 6,001,516
<DEPRECIATION> 3,084,643
<TOTAL-ASSETS> 61,872,653
<CURRENT-LIABILITIES> 16,533,693
<BONDS> 0
0
0
<COMMON> 90,513
<OTHER-SE> 45,227,433
<TOTAL-LIABILITY-AND-EQUITY> 61,872,653
<SALES> 97,807,750
<TOTAL-REVENUES> 97,807,750
<CGS> 73,106,642
<TOTAL-COSTS> 73,106,642
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,097,528
<INCOME-PRETAX> 10,594,065
<INCOME-TAX> 4,853,376
<INCOME-CONTINUING> 5,740,689
<DISCONTINUED> 0
<EXTRAORDINARY> 2,335,598
<CHANGES> 0
<NET-INCOME> 8,076,287
<EPS-PRIMARY> 1.05
<EPS-DILUTED> .95
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
HAGLER BAILLY, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE]
TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,100,379
<SECURITIES> 0
<RECEIVABLES> 29,639,440
<ALLOWANCES> 1,210,921
<INVENTORY> 0
<CURRENT-ASSETS> 47,063,120
<PP&E> 5,823,310
<DEPRECIATION> 2,711,481
<TOTAL-ASSETS> 58,314,785
<CURRENT-LIABILITIES> 15,496,460
<BONDS> 0
0
0
<COMMON> 90,311
<OTHER-SE> 42,651,446
<TOTAL-LIABILITY-AND-EQUITY> 58,314,785
<SALES> 73,261,785
<TOTAL-REVENUES> 73,261,785
<CGS> 55,868,411
<TOTAL-COSTS> 55,868,411
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 774,645
<INCOME-PRETAX> 8,277,179
<INCOME-TAX> 3,301,686
<INCOME-CONTINUING> 4,975,493
<DISCONTINUED> 0
<EXTRAORDINARY> 760,652
<CHANGES> 0
<NET-INCOME> 5,736,145
<EPS-PRIMARY> 0.80
<EPS-DILUTED> 0.70
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
HAGLER BAILLY, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE]
TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 2,998,791
<SECURITIES> 0
<RECEIVABLES> 36,819,726
<ALLOWANCES> 1,143,476
<INVENTORY> 0
<CURRENT-ASSETS> 45,682,359
<PP&E> 6,106,963
<DEPRECIATION> 3,395,425
<TOTAL-ASSETS> 58,928,484
<CURRENT-LIABILITIES> 11,187,590
<BONDS> 0
0
0
<COMMON> 90,679
<OTHER-SE> 46,371,898
<TOTAL-LIABILITY-AND-EQUITY> 58,928,484
<SALES> 23,642,220
<TOTAL-REVENUES> 23,642,220
<CGS> 18,754,380
<TOTAL-COSTS> 18,754,380
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,367
<INCOME-PRETAX> 2,619,441
<INCOME-TAX> 1,021,426
<INCOME-CONTINUING> 1,598,015
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,598,015
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.17
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
HAGLER BAILLY, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
TWELVE MONTHS ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE]
TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,043,567
<SECURITIES> 0
<RECEIVABLES> 20,319,258
<ALLOWANCES> 884,790
<INVENTORY> 0
<CURRENT-ASSETS> 22,247,705
<PP&E> 3,229,272
<DEPRECIATION> 344,570
<TOTAL-ASSETS> 33,563,812
<CURRENT-LIABILITIES> 19,606,047
<BONDS> 0
0
0
<COMMON> 60,717
<OTHER-SE> 6,564,969
<TOTAL-LIABILITY-AND-EQUITY> 33,563,812
<SALES> 75,395,711
<TOTAL-REVENUES> 75,395,711
<CGS> 59,745,299
<TOTAL-COSTS> 59,745,299
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,304,368
<INCOME-PRETAX> (2,060,513)
<INCOME-TAX> 1,122,272
<INCOME-CONTINUING> (3,182,785)
<DISCONTINUED> 0
<EXTRAORDINARY> 145,904
<CHANGES> 0
<NET-INCOME> (3,036,881)
<EPS-PRIMARY> (0.55)
<EPS-DILUTED> (0.55)
</TABLE>
